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Thursday, December 09, 2010

When I saw the title to this column, and the author's name, I assumed that Stossel's column would be about poverty in America, and that it would be about poor education in our schools and socialist indoctrination. I was surprised as I read the first paragraph, and realized that Stossel was writing about poverty in the poor and underdeveloped countries around the world. So, why do people in those poor countries stay poor? Because of the lack of property rights and rule of law. In this column, John Stossel explains why that is a very plausible explanation, and what can be done to solve the problem.

Of the 6 billion people on Earth, 2 billion try to survive on a few dollars a day. They don't build businesses, or if they do, they don't expand them. Unlike people in the United States, Europe and Asian countries like Japan, South Korea, Hong Kong, etc., they don't lift themselves out of poverty. Why not? What's the difference between them and us? Hernando de Soto taught me that the biggest difference may be property rights.

I first met de Soto maybe 15 years ago. It was at one of those lunches where people sit around wondering how to end poverty. I go to these things because it bugs me that much of the world hasn't yet figured out what gave us Americans the power to prosper.

I go, but I'm skeptical. There sits de Soto, president of the Institute for Liberty and Democracy in Peru, and he starts pulling pictures out showing slum dwellings built on top of each other. I wondered what they meant.

As de Soto explained on my Fox Business show recently: "These pictures show that roughly 4 billion people in the world actually build their homes and own their businesses outside the legal system. ... Because of the lack of rule of law (and) the definition of who owns what, and because they don't have addresses, they can't get credit (for investment loans)."